Consider the following purpose recital, plucked from an agreement filed last month on the SEC’s EDGAR system:
WHEREAS, in connection with the transactions contemplated by the Asset Purchase Agreement, Buyer desires that Seller Manufacture (as defined herein) and supply certain Products to Buyer, and Seller desires to Manufacture and supply such Products to Buyer in accordance with this agreement.
Ignore the archaism whereas. I’m more interested in the phrase in accordance with this agreement. I suggest that it collapses the sequence by which transactions come into being.
In any transaction, the general concept of the transaction will, in the mind of one or more of the parties, precede the contract. With respect to the transaction referred to in the recital, the buyer would have considered the transaction in general terms before entering into the contract, as in “Hey, we’re interested in buying the assets used in Business X, but for that transaction to make sense we’ll need the seller to supply us with certain products used in Business X.” The final contract is the fruit of negotiations aimed at fleshing out the basic concept.
So it sounds incongruous to say that the buyer desires to manufacture products in accordance with the agreement. It suggests that the desire and the final terms of the transaction arose simultaneously.
And expressing in purpose recitals a general intent that isn’t tied to the terms of the contract poses zero risk. No rational court could ever say that a general expression of intent trumps the specific terms that it introduces. If you can’t count on that, you can’t count on anything. But it goes without saying that a purpose recital shouldn’t state a purpose that’s broader than what the contract seeks accomplish (not counting any conditions, termination provisions, and the like).
So I say never use in a purpose recital in accordance with this agreement or anything comparable, such as upon the terms and subject to the conditions set forth in this agreement.
While we’re at it, note how in the sample recital use of the phrase in accordance with this agreement isn’t the only way the drafter jumbled together the idea of the transaction and its ultimate expression. The drafter also used in the recital defined terms that aren’t defined until later in the contract, namely “Manufacture” and “Product.” As I noted in this post, that’s a great way to aggravate your readers.